Franklin Delano Roosevelt once remarked that, “Taxes, after all, are dues that we pay for the privileges of membership in an organized society.” Unfortunately, while most taxpayers are willing to pay their fair share in order to enjoy the privileges of life in the United States, there are unscrupulous people out there trying to take advantage of the system. The latest and most egregious instance of this behavior is the use of stolen identities to file fraudulent tax returns, going as far as to claim fraudulent tax refunds. The IRS has implemented several steps to try to help curb identity theft. As you think about filing your 2015 tax returns, here are some of the most helpful tips:
- Protect your physical and electronic records. Taxpayers should be very protective of their Social Security numbers. Don’t provide it to anyone you don’t know, and don’t send it through email without ensuring that proper encryption is in place.
- Beware of phishing scams. Taxpayers should be skeptical of calls received from someone claiming to be from the IRS. The IRS won’t make collection attempts over the phone. They also will not contact taxpayers over the phone to discuss tax issues without first sending a bill or other notice. If someone claiming to be from the IRS contacts you soliciting personal information, demanding payment of tax liabilities, or using threatening language, you are urged to report these incidents to the Treasury Inspector General for Tax Administration (TIGTA) at 1-800-366-4484.
- Report suspicious activity. If you become aware of suspicious activity by individuals or businesses that you suspect are committing tax fraud, report them as directed here: How to Report Suspected Tax Fraud Activity.
If you take all these precautions and your identity still ends up compromised, there are steps that should be taken to minimize the impact of the theft:
- Report the ID theft to law enforcement officials. Not only should taxpayers file police reports when they are first victimized by identity theft, they should also contact one of the three credit bureaus and consider filing a complaint with the Federal Trade Commission.
- File Form 14039 – Identity Theft Affidavit. This form officially notifies the IRS of the identity theft.
- File your tax return. The vast majority of identity theft is identified during the electronic filing process. If you attempt to e-file your return and get a rejection notice indicating that your return has already been filed, you should still file your return and pay any taxes due with a paper form.
- Once issued, use your Identity Protection (IP) PIN to file your returns. Once the IRS determines that identity theft has occurred, the agency will issue this unique six-digit number to facilitate return filings on a prospective basis. The IRS typically will issue a notice indicating that a taxpayer’s account is being monitored, and will provide the IP PIN with that notice.
- Get help. Sadly, this problem is not exclusive to any particular group. It can affect anybody. Here at PYA, we encountered several instances of identity theft during 2014. We were able to successfully navigate the challenging waters of identity theft for these victims, so know that there is help out there.
If you want to read more about the fraud-related issues that are out there, or the schemes being used, you may access links to IRS materials below. If you find yourself the victim of identity theft and need assistance getting your taxes back in order, contact a related author listed below at PYA, (800) 270-9629.
Additional IRS Resources:
- Taxpayer Guide to Identity Theft
- Publication 5027, Identity Theft Information for Taxpayers
- Publication 5199, Tax Preparer Guide to Identity Theft
- Publication 4524, Security Awareness–Identity Theft Flyer
- Publication 4523, Beware of Phishing Schemes
